Futures contract orders can be submitted with different conditions known as order types. These order types allow traders to specify criteria related to how and at what price a trade may be placed.
ACDX supports several order types, including:
- Traders should be cautious when using market orders in thinly traded markets where the bid-ask spread may be wide and liquidity may represent an issue for price slippage, causing orders to get filled for a higher price if they are buying, or a lower price if they are selling
- Description - market orders execute at the next available price in the market. No price is specified with the order, and the order is filled at the current market price
- Use case - traders use market orders to enter or exit a trade quickly when execution certainty is a higher priority than price execution
- Since a limit order must be executed at the specified price or better, the market may touch the limit price several times with the trader not receiving a fill, depending on where the trader’s order is in order book queue
- The market must trade completely through a limit order’s price in order for a trader to earn a complete fill and partial fills can occur if only part of the order is executed
- A limit order remains in the order book until the order is either executed, canceled, or expires
- Description - limit orders are used to specify a price limit at which the order must be executed. Limit orders to buy are placed below the market and limit orders to sell are placed above the market. Since the limit order must be filled at the designated price or better, traders use limits to define the worst price at which the order will be executed, prioritizing price execution over execution certainty
- Use case - traders use limit orders to enter positions, setting orders at points that act as profit targets, as well as to exit positions. Limits can be placed in advance once a position has been entered, and the order will automatically execute once the price conditions have been met
- Stop Market
- Stop orders do not guarantee execution at the stop order price, and price slippage may occur in certain market conditions. Unlike limit orders, stops are not required to be executed at the designated price or better
- Description - stop market orders execute at the next available price once the designated trigger price crosses the stop price. Stop orders to buy are placed above the market and stop orders to sell are placed below the market. By default, stop orders trigger on mark price but you may configure them to trigger on last trade or index prices, as well.
- Use case - traders typically use stop orders in an attempt to limit losses if the market moves against a market position or to protect profits on an open position, but the order type can also be used to initiate a new position. Once the stop price is touched, the stop order is said to have been "elected," will be treated as a market order, and will be filled at the best possible price
- Take Profit Market
- Take profit orders do not guarantee execution at the order price, and price slippage may occur in certain market conditions. Unlike limit orders, take profits are not required to be executed at the designated price or better
- A take profit order will not be executed if the trigger price fails to touch the take profit specified price
- Description - take profit, or market-if-touched, orders execute at the next available price once the designated trigger price (by default, the mark price) crosses the stop price
- Use case - traders typically use take profit orders to exit positions once a price level has been reached although the order type can be used to initiate a position as well. Since the order executes at market once the market trades at the order price, execution certainty is prioritized over price execution
In addition to order type conditions that dictate how and at what price a trade may be placed, time limits, or order flags, can be used to specify how long an order may remain active on the exchange.
ACDX currently supports the following time-in-force flags:
- Good-Til-Canceled - an order remains valid until the trader cancels it, the order is filled, or the futures contract expires
Other Order Flags
- Reduce-Only - an order flagged reduce-only may only reduce or close your position. A reduce-only order will never grow or enter into a position.